Rafi Peled, a former police commissioner, director-general of the Prime Minister's Office and CEO of the Israel Electric Corporation, was yesterday released on bail of NIS 1.6 million by the Tel Aviv Magistrate's Court.
Peled, a controlling shareholder in the Peled-Givonygroup, is under investigation by the Securities Authority for allegedly failing to submit legally mandated financial reports and falsifying corporate documents.
The authority is also investigating the other controlling shareholders, Arieh Givony and David Haby, as well as the group's financial adviser, Tal Yaegerman. The three - who, like Peled, were interrogated yesterday and Monday - were also released on bail yesterday.
The authority became suspicious of Peled-Givony when several publicly traded companies in the group failed to publish financial statements for the first quarter of 2002. According to the authority, the reports were deliberately withheld to conceal various deals made by the controlling shareholders, including the transfer of money from publicly traded companies to private companies owned by Yaegerman and Givony, and thereby to mislead investors.
Yaegerman and Givony allegedly transferred tens of millions of shekels from the public companies to their private companies, for no apparent valid business reason.
This allegedly was done through a variety of extraordinary deals worth some NIS 90 million that involved several companies, including Afcon, Electro-Mechanics and Feuchtwanger Industries, but were not fully disclosed to investors. In one case, for instance, a subsidiary of Afcon allegedly contracted work out to Mashav, its parent company, and to Miav, which is privately owned by Givony. The subsidiary then transferred NIS 10 million to its subcontractors, terming this an advance.
The Securities Authority also charges that several companies in the group, including Feuchtwanger Investments, Hayl, Peled Investments and Mashav, failed to publish their quarterly statements because they did not want to report the heavy losses they incurred on their investment in another company, Iscal. These losses caused such a substantial deficit in the companies' equity that had they been reported, the companies would probably have received an "ongoing concern" warning.
Their accounting firm, Kost, Forer & Gabbay, insisted that the Iscal losses should be included in the first-quarter statements. When the companies refused, the auditors refused to sign off on the reports - thereby preventing them from being published.
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